Scot, Davide has provided you with a simple and correct explanation. However, I would like to supplement it with this, first if it is a NNN property, is a fee simple ownership, ground lease, etc.? Once you have determined what it is you are looking at, next what is it are you or your clients trying to achieve? Accelerated depreciation? If you are or not, I would advise you to seek the advice of a qualified CPA that is familiar with commercial real estate to formulate a depreciation schedule accordingly. Good luck.
May 26, 2011